Who Remembers 'Guns and Butter'?

President Lyndon B. Johnson's policy of Great
Society spending and the Vietnam War is credited with the rising American inflation
that persisted until checked by President Reagan's supply-side policy.

In Johnson's time, the American economy and the U.S. dollar were strong,
and there was no current account deficit. Yet LBJ's policy of guns and butter
did long-term harm.

The Bush-Obama 21st-century policy of guns and butter makes LBJ look like
a piker. The 2009 and 2010, federal budget deficits will be monstrous even
without guns. But Obama is exiting (apparently) the Iraq War in order to start
two, possibly three, more wars.

Obama has announced a surge of U.S. troops in Afghanistan. Widening that
war will require the United States to occupy, or attempt to occupy, parts of
Pakistan. The disrespect for Pakistan's sovereignty will further radicalize
that large, nuclear-armed country and bring Pakistan, or at least parts of
it, into armed conflict with the United States.

As if this isn't enough new war, President Obama (and the incoming CIA
director, Leon Panetta) accused Iran of developing a nuclear weapon, an uninformed
charge that stands in conflict with the National Intelligence Estimate, which
concludes that Iran halted all work on a nuclear weapon years ago.

Shades of "weapons of mass destruction" and "al-Qaeda connections"!
The Bush regime and the complicit U.S. media persisted in accusing Saddam Hussein
of possessing weapons of mass destruction – weapons that the prime minister
of Britain, Tony Blair, otherwise known as Bush's poodle, said could be employed
in "45 minutes." National Security Adviser Condi Rice and VP Cheney warned
of "mushroom clouds" going up over American cities.

All of these lies were told in the face of the documented evidence from
weapons inspectors on the ground in Iraq that no weapons of mass destruction
existed.

Now Obama is employing the same tactic, creating fear over nonexistent
Iranian nuclear weapons.

Even without the massive expense of the bailout and stimulus programs,
the United States has no capability to fight wars in Pakistan, Afghanistan,
and Iran. Conflict with Iran would likely bring Iraq, now in the hands of Shi'ites
allied with Iran, into the conflict. The entire Middle East would likely explode.
Considering that the United States had to end the war in Iraq by paying the
Sunni insurgents not to fight and by signing on to a withdrawal agreement dictated
by the Shi'ite government, there are no prospects for U.S. success in such
an extensive new war.

Before Obama overcommits the United States both financially and militarily,
he needs to find some competent advisers. Overreach is heading for new levels
that will bring America to its knees.

Obama has only been in office a couple of weeks, and he is already proving
to be even more reckless than Bush. Bush's largest guns-and-butter deficit
was $455 billion. Obama's 2009 budget deficit will be at least $2 trillion,
a fivefold increase in one year, to be followed by another monster deficit
in 2010.

The United States has never had such near-term massive financing requirements,
much less at a time when the rest of the world is in economic turmoil and very
displeased with the United States.

Obama needs a reality check and an escape from Washington hubris. If the
United States cannot finance its monster deficits except by printing money,
it will mean the end of the dollar as reserve currency and the end of American
power.

Mr. President, as you said in your first press conference on Feb. 9, the
party really is over.

Paul Craig Roberts
wrote the Kemp-Roth bill and was assistant secretary of the Treasury
in the Reagan administration. He was associate editor of the Wall
Street Journal editorial page and contributing editor of National
Review. He is author or co-author of eight books, including
The
Supply-Side Revolution (Harvard University Press). He has
held numerous academic appointments, including the William E. Simon
chair in political economy, Center for Strategic and International
Studies, Georgetown University, and senior research fellow, Hoover
Institution, Stanford University. He has contributed to numerous
scholarly journals and testified before Congress on 30 occasions.
He has been awarded the U.S. Treasury's Meritorious Service Award
and the French Legion of Honor. He was a reviewer for the Journal
of Political Economy under editor Robert Mundell.

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